C 20073 The Director’s Programme of Work and Budget

C 2007/3: The Director’s Programme of Work and Budget Scope of Document: This document responds to the guidance of the Programme and Finance Committees and the Council and describes the main challenges and policy issues likely to influence FAO’s work in the next biennium, together with the proposed major programme thrusts and resource allocations This PWB is elaborated in the overall context of the ongoing IEE, UN Reforms and implementation of approved FAO Reforms (Par 1-2) It is recalled that, as mandated by the last Conference, the Programme and Finance Committees endorsed in May 2006 a Revised PWB 2006-071 which incorporated a revamped chapter and programme structure (in itself an outcome of the decisions of the Conference on Reforms in the Organization) The new programme structure involved a significant reformulation effort and considerably streamlined programme entities, with the total number going down from 261 to 186 (Par 6) Section I: Overall Context IEE and its Eventual Outcome: It is clear that the Conference will need to act – as it will deem appropriate – on both the PWB 2008-09 and the IEE report The PWB could, as usual, serve as the prime basis for a decision on the biennial budget, while amendments to the Programme of Work and necessary budgetary adjustments during 2008 and 2009 cannot be prejudged at this juncture but could arise as a result of the overall decisions of the Conference in November 2007 (Par 14) UN Reforms: Broad reform initiatives in the UN system have implications for all UN institutions but remain very much in the nature of work in progress at this stage FAO is actively participating in UN system discussions and in the "delivering as one" country pilots It is also engaged with the other Rome-based food agencies to improve substantive and administrative collaboration both at headquarters and in the field (Par 15) Implementation of Reforms Approved by FAO Governing Bodies: Significant reforms, particularly changes to the organizational structure, were approved by the governing bodies in phases Implementation of these reforms unfolded through the 200607 biennium and will continue to the extent required into the next biennium The budgetary implications have been reflected in this full PWB (Par 23) As for the Headquarters structure, the restructuring implemented during the current biennium includes three major changes over previous arrangements, which will: contribute to more effective action in important new subjects such as climate change and bioenergy; ensure adequate coverage of interdisciplinary thrusts such as capacity building and knowledge management; and secure higher visibility and priority for FAO’s interface with the UN system (Par 25) Savings and Efficiency Gains: The vigorous pursuit of efficiencies has been under way in FAO since 1994 and remains a high priority and ongoing management process The results of the Organization’s efforts up to the 2004-05 to make inputs less costly without negative impact on outputs, and improve cost recovery for services rendered, has yielded efficiency savings estimated of more than US$ 120 million per biennium compared with 1994 (Par 36) Following governing body guidance in 2005, efficiency savings cover four broad themes: • • • • Efficiencies: focusing on inputs, as defined by the FAO Council at its 110th Session and seeking “reductions in the cost of inputs without material negative impact on the outputs"5; Cost recovery improvements: ensuring FAO is adequately reimbursed for its services, where appropriate, also in accordance with the expectations of the Council; Streamlining administrative and financial processes: aimed at achieving further efficiency gains and enhanced human resources policy and management, as supported by Conference Resolution 6/2005 on reforms in the Organization; and Productivity gains: targeting opportunities for increases in outputs without increasing the cost of inputs Section II: Substantive Thrusts Major Trends and Challenges: The main drivers of change include: a) uneven population growth; b) urbanisation and changing food production, distribution and consumption patterns; c) increased mobility of goods, capital and labour across borders but also within countries; d) growing pressure on natural resources such as land, water and biodiversity; e) increasing demands on agriculture to provide food, feed and energy resources; f) climate change; g) food safety and biosecurity, including transboundary pests and diseases (Par 68) The world’s population is likely to grow from 6.5 billion at present to 9.2 billion people in 2050 The bulk of this increase will take place in developing countries, with the poorest countries experiencing higher population growth (Par 69) Population growth will also be unevenly distributed within countries Over the next 25 years the whole increment in global population will concern urban areas While urbanisation affects all countries, its impact will differ vastly (Par 70) Urbanisation will have a profound impact on the location of food production, volumes and composition of international trade and distribution channels, with such key facets as: the role of multinational food companies, global sourcing arrangements, expanding supermarkets and relocalisation of food supply systems through national and regional markets (Par 71) Despite the resulting challenges for rural development in general and agricultural policy in particular, the world as a whole is expected to be a richer one The World Bank forecasts the next 30 years to be a period of dynamic growth, with continuing benefits from freer movements of capital, goods, and services which could foster growth, allow rapidly emerging economies to generate the necessary domestic investments and eventually boost personal incomes The economies of East Asia and South Asia are expected to continue to grow rapidly (5.2% p.a and 4.2% p.a respectively), while countries in sub-Saharan Africa may lag behind (2.2% p.a.) (Par 72) A massive expansion in international movements of goods, a growing threat of new transboundary pests and diseases has emerged At the same time, climate change is likely to change the distribution patterns of animal diseases and plant pests (Par 78) Continued adherence to global goals and efforts required to attain the MDGs: The Strategic Framework 2000-2015 adopted by the FAO Conference in 1999 set out three interrelated global goals that the Organization should help Members achieve: • • • access of all people at all times to sufficient nutritionally adequate and safe food, ensuring that the number of chronically undernourished people is reduced by half by no later than 2015; the continued contribution of sustainable agriculture and rural development, including fisheries and forestry, to economic and social progress and the wellbeing of all; and the conservation, improvement and sustainable utilisation of natural resources, including land, water, forest, fisheries and genetic resources for food and agriculture (Par 79) Progress so far in achieving hunger and poverty reduction goals has been mixed While parts of the world are on track for achieving MDG1 (East Asia) or have already met the target (China), others are at severe risk of failing to cut the prevalence of hunger and poverty by half by 2015 (sub-Saharan Africa) Inter-regional differences persist even in countries and regions that are exhibiting overall progress towards achieving MDG1 Moreover, “hidden hunger” caused by deficiency of iron, iodine, zinc and vitamin A in the diet, is widespread Lack of progress on the hunger target impedes the attainment of other MDGs, especially poverty reduction High levels of child and maternal mortality (MDG4 and MDG5 respectively) and low rates of school attendance in developing countries (MDG2) are also intimately linked to the prevalence of hunger and malnutrition (Par 81) The preceding trends and challenges continue to guide the design of FAO programmes and the component entities and translate into strong expectations from the entire membership of continued active involvement of the Organization with: public goods such as international rules, standards and conventions; assistance in relation to multilateral trade negotiations; commonly acceptable rules on food safety; and support to international and national actions in dealing with transboundary pests and diseases of plants and animals, environmental degradation, and natural and human-induced disasters (Par 83) The formulation of the Programme of Work seeks to conform to other expectations of the membership, i.e.: • • • • a demonstrated focus in areas of comparative advantage, particularly through the rigorous targeting of programmes and beneficiaries and adherence to well recognised priorities; enhancing the relevance of FAO’s programme entities through optimising the positive “feedback loop” that occurs between global analytical work and the experience gained from local application; taking maximum advantage of alliances, partnerships and joint programmes with the UN and other organizations, in particular the Rome-based UN agencies and at country level; and paying due attention to administrative streamlining and efficiency measures, drawing on successful experiments elsewhere (Par 84) Multidisciplinary Thrusts: Mulitdisciplinarity necessitates a joining of forces between units placed in the same or different departments or geographic locations to holistically address common issues in meeting the needs of the Membership, and also to reduce potential duplication In the wake of the adoption of the Strategic Framework 2000-2015, multidisciplinarity was exemplified by highlighting in successive Medium Term Plans (MTPs) and Programmes of Work and Budget (PWBs) “priority areas for interdisciplinary action” (PAIAs) The Director-General’s reform initiatives of the 200506 period sought to attenuate the above problems by promoting increased use of ex ante joint planning (Par 86-88) The revised PWB 2006-07 indicated that work on Gender and Development would be carried out within the framework of the related Plan of Action sanctioned by the Conference, while work on ethics would be pursued at a reduced scale (Par 90) While ex ante planning and “mainstreaming” are being promoted as the preferred practical routes to execute multidisciplinary activities, recourse to central catalytic resources remains a necessary instrument for the concerned groups to meet unforeseen needs The PWB 2008-09 incorporates a further increase for central catalytic funding so that the available provision of catalytic resources would be US$ 2.8 million Of this, US$ 1.6 million has been earmarked for catalytic work on knowledge management, capacity building, climate change and bioenergy (Par 93-94) Knowledge Management and Exchange: During the upcoming biennium, FAO will continue to develop and support thematic knowledge networks, document best practices and lessons learned, and develop and put in place mechanisms and tools to facilitate and foster knowledge exchange Priority will be given to establishing networks first within the Organization (i.e.encompassing all levels: headquarters, regional offices, subregional offices, and country offices) and subsequently reaching out to external Centres of Excellence, through partnerships to be established under formal agreements (e.g CGIAR, Carnegie Mellon University, Wageningen Agricultural University) The number of such networks will be monitored and their achievements reported on a regular basis (Par 99) WAICENT will be further enhanced through additional interactive services, building on the experience and success of the Ask FAO initiative Cooperation will also continue with international centres of excellence around the world to explore tools to facilitate multilingual information retrieval (Par 100-101) Capacity Building: the Knowledge Exchange and Capacity Building Division (KCE) will facilitate common approaches to the organisation and management of capacity building activities, leading an Interdepartmental Working Group (IDWG) on Capacity Building and using catalytic resources to focus on: a) the use of clear diagnostic methods for needs assessment in countries; b) consistency of capacity building activities with broader Regular Programme objectives; c) preparation of capacity building programmes drawing on documented good practices; d) incentives to encourage delivery of such programmes; and e) further development of the corporate Web-based portal on capacity building (Par 106) It is also intended to: change a general output-oriented approach in capacity building into a more outcome/impact-oriented one; apply results-based management tools to link FAO’s objectives with planned outcomes/impact in terms of capacity building at country level (Par 107) Mobilisation of extrabudgetary funding will be important to strengthen FAO’s role as a facilitator of capacity building at all levels: government decision-makers, institutions (organizational development), and individuals (e.g technical training, fellowships etc.), as well as access to sources such as “Direct Budget Support” funds and untied and flexible country-driven resources provided on the basis of partnership with donors (e.g FAO-Netherlands Partnership Programme) (Par 109) Climate Change: FAO is to assist countries by providing data and information, policy and technical advice, management tools (codes of best practice and voluntary guidelines), technology transfer and capacity building on the challenges resulting from climate change to agriculture, forestry and fisheries, on ways to lessen and cope with its impacts on people’s livelihoods, and on approaches and opportunities discussed in international fora More specifically, FAO will: • • assist countries in developing new or strengthening integrated vulnerability baselines and responses; support multistakeholder action platforms for adaptive livelihoods; • • • foster “good enough” practice guidelines in testing climate change adaptation targets; support capacity building for the development and use of crop varieties more resistant to environmental stress; and assist national authorities in including climate risk management strategies in development plans (Par 115) Given the strong linkages between food security, energy, climate, ecosystem, rural development and trade objectives, close coordination will be pursued with internal communities of practice dealing with disaster risk management, biological diversity and bioenergy FAO will build on the development and testing of a livelihood-based approach to promote climate change adaptation processes relevant to rural communities in least developed countries, as well as on guidelines for addressing gender in negotiations and adaptation (Par 116) As a result, FAO’s climate change work is expected to progressively achieve: • • • • • • • • full reflection of climate change adaptation and mitigation in FAO corporate policies, programmes and activities; expanded assistance to countries in developing national strategies, policies and action plans on mitigation of, and adaptation to climate change and variability; effective technical guidance on reduction of greenhouse gases emissions in the agriculture and livestock sector; enhanced international partnerships related to methods and tools, data and information and policy and planning; increased technical support to inter-governmental mechanisms related to UNFCCC, IPCC and post-Kyoto Protocol dialogues and negotiations; integrated approaches to national climate change responses as regards policy, land and water management, agriculture cropping systems, forest and fisheries issues; capacity building and training for key stakeholders on policies and practices related to mitigation of, and adaptation to climate change; and adequate assistance to countries in national assessments of forest carbon stocks (Par 118) Concerning bioenergy, International Bioenergy Platform will facilitate FAO’s engagement with partners to assist countries in assessing and developing capacities for sustainable bioenergy The Interdepartmental Working Group on Bioenergy and the Division of Environment, Climate change and Bioenergy will tap multidisciplinary expertise to achieve the following results under 2KP06 and related programme entities: • An effective corporate framework on bioenergy to guide programme implementation This will be accompanied by a mobilising mechanism to ensure that regular programme and extrabudgetary resources are used in a coordinated manner to undertake global, regional and national activities that support sustainable bioenergy development • • • • • • Active leadership through collaborative mechanisms such as: the Global Bioenergy Partnership, for which FAO hosts the Secretariat; and UN-Energy, for which FAO is the vice-chair Such partnerships will help to ensure that food security, sustainable natural resources management and rural development opportunities are well reflected in all fora relevant to FAO’s mandate Ongoing collaboration with technical centres of excellence will also be expanded An international bioenergy information system to facilitate bioenergy assessment and analysis at national, regional and global levels and serve as a reference point for reliable data on bioenergy with respect to food security and environmental sustainability Making bioenergy information more accessible, strengthening human resources capacity and managing FAO’s responses to country requests and national needs primarily through the decentralized offices This will be supported by the promotion of regional and national bioenergy task forces to develop strategies tailored to specific needs Completion of case studies using the agro-ecological zones framework as a point of departure to understand policy and technical issues related to bioenergy development in selected countries Some of these countries will also serve as reference cases for lessons learned Practical tools and guidelines on bioenergy best practices including assessment, planning and development with a focus on food security, environment and rural development, taking into account gender-sensitive bioenergy services for local communities and vulnerable populations Capacity building and training for regional, national and local stakeholders helping to mobilise and manage sustainable bioenergy systems (Par 123) Regular Budget and Extrabudgetary Resources: Since the PWB 1998-99, the document presents the Programme of Work funded from assessed contributions and from support cost resources and other income as above, as well as informing the membership of the level of other expected extrabudgetary voluntary contributions More recently, presentation of extrabudgetary resources has been split between those that would provide direct support to implementation of the Programme of Work, and those providing technical and emergency (including rehabilitation) assistance to governments for clearly defined purposes consistent with the policies, aims and activities of the Organization The forecast level of extrabudgetary resources is based on the developments and main trends in voluntary contributions - approved and pipeline resources from donors - showing the expected level of expenditure at Programme level (Par 125) Recently, the total extrabudgetary expenditure has been approaching the same order of magnitude as that of the Organization’s Programme of Work Moreover, direct support to the Programme of Work has been a steadily rising proportion of extrabudgetary resources, reaching some US$ 117 million (18% of extrabudgetary resources) in 2004-05 and projected to rise to US$ 16.2 million (21%) in 2006-07, as shown in Table (Par 126) The Organization has taken steps to ensure that extrabudgetary projects are formulated and executed in line with the policies and programmes of the Organization The Programme and Project Review Committee, established by the Director-General in 1999, reviews all non-emergency programme and project proposals (including TCP and SPFS projects) It aims to ensure that projects are mutually supportive and possess real synergies with the Organization’s objectives The Committee, through a process involving all technical departments, makes sure that projects adhere to six principles in the formulation stage: • • • • • • ensure continuing interaction between the Organization's normative and operational activities so that these are mutually supportive; draw maximum benefit from the Organization's comparative advantage and intervene where such advantage is known to exist; have a tangible impact in improving the food security of the least privileged populations and contributing to sustainable rural development; build and/or reinforce national capabilities to ensure continuity of action, promote sustained self-reliance and support the sustainable use and management of natural resources, with SPFS projects and other FAO projects; promote gender equality and equity through the systematic compliance with FAO's stated commitment to and policy on mainstreaming a gender perspective into its normative work and field activities; promote broader partnership, alliances and participation (Par 127) Recently, the governing bodies have expressed concern about the increasing dependency of FAO’s core programme of work on extrabudgetary resources (Par 129) In addition, the FAO Council at its 132nd session, in noting the recent significant rise in extrabudgetary resources at the disposal of the Organization, welcomed the Secretariat’s intention to provide a more integrated presentation of Regular Budget and extrabudgetary resources in the full PWB 2008-09, bearing in mind the need to move firmly towards building a strategic and balanced approach to resource mobilisation to respond to global and local needs and challenges (Par 130) UN Reforms: The TCPR provides a framework for establishing system-wide coherence of the operational activities of the UN system at the country level It addresses a number of issues with regard to the effectiveness and relevance of UN operational activities, transaction costs and efficiency, the strengthened role of the UN resident coordinator as well as various forms of interagency cooperation at the country level Among the emerging issues are those concerning resource mobilisation for country-level operational activities in relation to FAO’s normative work in relation to the concept of One Programme and how to integrate services provided by specialised agencies in those areas that are not directly covered by UNDAFs (Par 133) Emerging Donors and Funding Sources: The new generation of donors are tending to focus on specific programmatic challenges rather than country-oriented perspective, providing for quick and flexible response wherever possible (Par 134) Strategic Partnership Agreements: FAO has negotiated Strategic Partnership Agreements with several bilateral partners, including the Netherlands, Norway, France and Belgium More recently, negotiations are underway with the European Union, Sweden and Spain to adopt the same approach These agreements provide a flexible funding mechanism for interdisciplinary action in the context of broader development initiatives at country level Strategic Partnerships are managed by both partners (i.e FAO and the relevant donor) within the given institutional framework and are not just a series of stand-alone project activities An essential part of these partnerships is the introduction of basic principles of results-based management, which establishes results indicators to monitor the effective use of resources (Par 144) Special Fund for Emergency and Rehabilitation Activities: The Special Fund for Emergency and Rehabilitation Activities (SFERA), which was established in May 2003 with a target of US$ million, expedites rapid deployment and provides working capital in anticipation of receiving approved donor funds The international response to the 2004 Indian Ocean earthquake and tsunami represented the first significant donors' contributions to the SFERA, with no earmarking against specific activities and budget lines (Par 145) Areas of potential interest for extrabudgetary funding: In order to assist with the ongoing reform process, a number of internal working groups covering cross-cutting issues generated new ideas and formulated proposals in 2006 (Par 146) Country level planning and resource mobilisation: The increased use of joint programming mechanisms by the UN system (i.e multidonor trust funds, pooled funding joint programmes, sector wide approaches) puts increased focus on coordination, costeffectiveness and reduced transaction costs at country level (Par 148) The full Programme and Work Budget document offers a detailed breakdown of the individual chapters and programmes from p 37- 49 Section III: Key Financial and Budgetary Issues The Secretariat has regularly brought to the attention of the membership the gravity of the Organization's General Fund deficit, cash flow position, underbudgeted costs and unfunded liabilities, with a view to seeking improvements in the situation At its 131st session in November 2006, the Council expressed serious concern regarding the Organization's worsening financial situation, the large amounts of unbudgeted costs, unfunded and unrecorded liabilities and the increasing General Fund deficit It noted that the deterioration in the cash flow situation, due in particular to delays in payment of assessed contributions by Members, was critical as all reserves had been exhausted, forcing the Organization to resort to external borrowing for longer periods than in the past to meet its obligations It also endorsed the request of the Finance Committee that the Secretariat submit an appropriate financial proposal for 2008-09 aimed at restoring the financial health and longterm sustainability of the Organization (Par 208-209) Incremental requirements to execute the 2008-09 Programme of Work at a "maintenance budget" level: • • In the first instance this comprises requirements beyond the current nominal budget level to preserve purchasing power parity with 2006-07 - that is, compensation for anticipated cost increases The estimated incremental requirements for 2008-09 are US$ 101.4 million; The second part comprises incremental budgetary requirements that have emerged in 2006-07 and have been reported to or endorsed by Members for implementation in 2008-09 without matching funding, estimated at US$ 18.7 million These decreased from US$ 23.9 million in the SPWB on account of the proposal for phasing the adoption of Russian as a language of FAO and the coverage under staff costs of the one-time costs for terminations related to the implementation of the SSC (Par 212) Requirements to tackle financial health, liquidity situation and reserves: These are recurrent or one-time requirements to tackle the General Fund deficit by addressing unfunded liabilities and augmenting safety nets (reserves) so as to avoid liquidity shortages The Council agreed that action needed to be taken to restore FAO's financial health, but the time period and modalities for tackling the matter required further reflection (Par 214-215) In this full PWB, the minimum incremental provisions for 2008-09 under this rubric have been further appraised by the Secretariat with a view to also proposing a more phased approach and thus now range from a minimum of US$ 37.3 million to the same desirable level of US$ 133.8 million (Par 218) Incremental Budgetary Requirements to Execute the Programme of Work 20082009: Inflation represents the cost impact in 2008-09 of those adjustments that are expected to take effect at various points in the next biennium To assure prudent fiscal management and independent verification, external forecasts from the Economist Intelligence Unit and published data of authoritative bodies such as the International Civil Service Commission (ICSC) continue to be used in arriving at inflation estimates A conservative approach to risk is adopted in the 2008-09 inflation (Par 222) The incremental requirements for cost increases to maintain the same purchasing power as in 2006-07 are estimated at US$ 101.4 million (net of income) for 2008-09, which is considerably higher than in previous biennia, as tabulated below (Par 224) The 2008-09 financial effect of biennialization is a consequence of two factors: • • staff costs per workmonth in 2006-07 are at variance from the budgetary estimates prepared two years earlier in the PWB 2006-07, so adjustment is required to correct the budgetary estimates in order to reach actual 2006-07 cost level; and when increased costs that take effect at some point during the first or second year of the current biennium (whether budgeted or otherwise) are quantified for 200809, additional financial outlay has to be provided because the increased costs have to be applied to a full 24 month period in 2008-09 (Par 228) The FAO governing bodies have been advised that staff costs are difficult to predict despite the refined information systems used to analyse current costs patterns and quantify trends and this had led to variance from the budgetary estimates prepared in mid-2005 in the PWB 2006-07 This, as noted above, is the first of the two factors to be reflected under biennialization The governing bodies have recognised that in the current biennium staff costs are underbudgeted by around US$ 46 million due to cost escalations that have taken effect at various stages in 2006-07 (Par 230) With regards to inflation, a total increase of US$ 20.4 million foreseen for personnel services is based on estimates for inflation projected to take effect in 2008-09 in various components (Par 237) One time and transition costs Implementation of the Shared Services Centre: The full implementation of the Shared Services Centre (SSC) involves a number of one-time and transition costs The government of Hungary is providing or meeting the following one-time costs: the required office space; technical installations and civil works; security and safety works; the necessary equipment (including information technology, telephony and computers) and furniture for a total value of approximately US$ million In addition, it agreed to share in the annual running costs of the SSC The government will also provide resources for each of the next three years for the relocation costs of international staff and training of local staff, which will be supported by the secondment of experienced or current SSC staff from Rome (Par 263) The implementation of the decentralized reform model in the Latin America and Caribbean region is expected to result in some redeployment costs, currently estimated at approximately US$ 0.3 million, which is included under the programme management entities of Chapters and as incremental budgetary requirements within the maintenance budget In addition, one-time set-up costs for the new office in Central America, and potential refurbishment costs for the office in Santiago estimated at US$ 0.2 million, would be funded from extrabudgetary resources (Par 267-268) Training: Several different categories of staff – particularly FAO Representatives and remaining staff to be deployed in subregional multidisciplinary teams in Africa, Central Asia and Latin America/Caribbean – require one-time intensive retraining including workshops on improved programme planning Training modules have been developed on: policies and strategies for agricultural and rural development; agricultural investment, and FAO Representative competency development Also foreseen is training for all new national professional and administrative officers The total one-time training cost for the biennium is estimated in excess of US$ million, for which extrabudgetary resources will be sought (Par 269) Introduction of Russian as a language of FAO: The Finance Committee in May 2007 and the Council in June 2007, reviewed the incremental services that would be required for full implementation of Russian as language of the Organization during 2008-0925 The costs of such additional services were estimated at US$ 5.2 million, of which some US$ 4.6 million representing recurring costs (Par 270) Requirements to Tackle Financial Health, Liquidity Situation and Reserves: The Council at its 132nd session expressed concern over the high level of arrears outstanding and urged Member Nations to pay their contributions in full, noting that as of 15 June 2007, 62 Member Nations still had arrears outstanding from 2006 and previous years, and 27 owed arrears in such amounts as would prejudice their Voting Rights in accordance with Article III.4 of the Constitution In addition, the Organization’s severe cash shortage was also caused by the very low percentage of current assessments actually received so far in 2007, which showed a significant shortfall compared to the same period last year and two years ago It agreed to recommend to Conference several measures to improve the timely payment of assessed contributions by Member Nations, as explained in paragraph 215 (Par 278) Funding of After-service Medical Coverage past service liability: FAO’s ASMC past service liability has never been, and is not intended to be, met from the budgetary appropriations or the Programme of Work As explained in Annex 4, beginning with the 2004-05 biennium, the Conference approved separate additional assessments on Members towards funding the ASMC past service liability, although at a level less than required to fully fund the liability by 2027 The Council has previously acknowledged the principle of matching the funding to the amortization of the liability as indicated by the latest actuarial valuation The resulting biennial amortization is US$ 45 million30 This requires an increase of US$ 30.9 million above the present US$ 14.1 million biennial assessment to achieve matched funding, as Council recommended at its 129th session whereby funding by Members should be at the level prescribed by the latest actuarial valuations (Par 284) Amortization of terminal payments past service liability: The liability relates to the end of service payments including accrued annual leave, repatriation grant, termination indemnities, and cost of repatriation travel that will arise when the staff members separate from the Organization The unrecorded – and unfunded – past service liability at 31 December 2006 was US$ 24.2 million, which is not intended to be met from the budgetary appropriations or the Programme of Work The past service liability would therefore need to be addressed in the same manner as ASMC past service liability (Par 286) The desirable funding level proposes to include a provision for a special assessment of US$ 8.8 million per biennium, which would fully fund the TPF past service liability over a period of three biennia Presently, no funding mechanism exists, and the minimum incremental scenario has been revised so as to not address the funding in 2008-09 (Par 287) Working Capital Fund: The Finance Committee has been previously advised that to cope with the operating cash requirements in the face of persistent delays in Members’ contributions, the WCF should increase by US$ 49.6 million to reach US$ 75 million, or 8.4% of a 2008-09 maintenance budget through a one-time assessment on Members Special Reserve Account: The SRA had a balance of US$ 12.1 million as at end-2006, following a charge of US$ 6.4 million for a portion of the unforeseen 2006-07 headquarters general service salary increases, as recommended by the September 2006 Joint Meeting of the Programme and Finance Committees The Finance Committee, at its session in September 2006, also recommended a replenishment of US$ 6.4 million to cover the underbudgeted portion of the cost of the GS salary increases charged to the SRA The minimum incremental funding for the SRA is maintained at the same level as was proposed in the SPWB of US$ 6.4 million The level of the assessment would depend on the latest balance of the SRA and on the approved budget level Assuming there will be no balance left on the SRA by the end of the biennium, an assessment in the order of US$ 44.5 million to fully replenish the SRA up to 5% of a 2008-09 maintenance budget could be required (Par 292-293) Conclusions Cumulative Funding Requirements Funding of 2008-09 Programme of Work: The maintenance budget provides for the resources needed to continue the 2006-07 Programme of Work in 2008-09 It therefore starts with a net budgetary appropriation of US$ 765.7 million, as approved for the current biennium Estimated cost increases of US$ 101.4 million must be added to this to preserve purchasing power (primarily for increased staff costs which were underbudgeted in 2006-07) and US$ 18.7 million for incremental requirements that have been reported to or endorsed by Members in 2006-07 for implementation in 2008-09 (capital expenditure, transition costs and Russian as an FAO language) (Par 296) The resulting appropriation level of US$ 885.8 million represents the amount required to continue a Programme of Work in the next biennium at the 2006-07 level A net budgetary appropriation below this amount would require programme cuts A maintenance budget would not address certain areas of underfunding that have built up over the years or possible follow-up to the IEE and UN Reforms, the cost of which remains unquantified at present (Par 297) Restoring the financial health of the Organization: A desirable incremental funding level of US$ 133.8 million would expeditiously improve FAO’s financial health in 200809 However, as tabulated below, proposals are put forward as a minimum, to address the Organizations’ deteriorating financial health and liquidity by: • • providing funding for After-service Medical Coverage past service liability, via additional biennial assessments, as already recommended by Council in November 2005; and restoring to the Special Reserve Account a portion of the unbudgeted General Service salary increase, which was charged to the reserve in the current biennium as recommended by the Finance Committee to Council in November 2006 Impact on Assessments: The overall 2008-09 funding requirement for a maintenance budget and for providing minimum funding in 2008-09 towards restoring FAO’s financial health amounts to US$ 936.2 million, representing a 21% increase in the level of assessments compared with the present biennium, as summarised in Table 13 The impact on individual Members may differ from the overall increase on account of the adjustments to the proposed 2008-09 scale of contributions, which for example envisions lower assessment rates for Japan and Brazil, and higher rates for Australia, China, Mexico, Republic of Korea and Spain (Par 302) Budgetary Appropriations 2008-09 THE CONFERENCE, Having considered the Director-General's Programme of Work and Budget: Approves a total net Appropriation of US$ 947,985,000 for the financial period 2008-09 and approves the Programme of Work proposed by the Director-General for 2008-09 as follows: a) Appropriations are voted at a rate of Euro = US dollar 1.36 for the following purposes: Such contributions shall be established in US dollars and Euro and shall consist of US$ 449,378,000 and Euro 365,782,000 This takes into account a split of 47.5% US dollars and 52.5% Euro for the appropriations (net) An amount of US$ 45,000,000 shall also be financed by assessed contributions from Member Nations to fund the amortization of After-service Medical Coverage (ASMC) The contributions shall be established in US dollars and euro, taking into account a split of 40% US dollars and 60% euro, and shall therefore amount to US$ 18,000,000 and Euro 19,853,000 The total contributions due from Member Nations to implement the approved Programme of Work and to fund the amortization of ASMC shall amount to US$ 467,378,000 and Euro 385,635,000 Such contributions due from Member Nations in 2008 and 2009 shall be paid in accordance with the scale of contributions adopted by the Conference at its Thirtyfourth Session Replenishment of the Special Reserve Account THE CONFERENCE, Noting that one of the purposes of the Special Reserve Account, established by Conference Resolution 13/81 is, subject to prior review and approval by the Programme and Finance Committees, to finance unbudgeted extra costs of approved programmes due to unforeseen inflationary trends, to the extent that such costs cannot be met through budgetary savings without impairing the execution of such programmes; Noting that the Programme and Finance Committees, at their Joint Meeting of September 2006, agreed to charging a portion of the unforeseen and unbudgeted General Service salary increase of 2006-07 arising from the Rome-based General Service Salary Survey results, in an amount of US$ 6.4 million, to the Special Reserve Account, and that this was supported by the Council at its Session of November 2006; Recalling that the Finance Committee, at its Session of September 2006, recommended that the necessary funding for the US$ 6.4 million charged to the Special Reserve Account be secured through a replenishment of an equivalent amount through Member Nations’ assessments for the Special Reserve Account at the time of the formulation of the Programme of Work and Budget for 2008-09; Recalling further that the Council, at its Session of November 2006, requested the Finance Committee to review the funding of unbudgeted costs and to report the results to the Council; Having considered, in line with the foregoing, the proposals submitted by the DirectorGeneral to the Finance Committee, at its Session of September 2007 and to the Council, at its Session of November 2007, for the replenishment of the Special Reserve Account in an amount of US$6.4 million; 1) Decides to make a special assessment on Member Nations to provide for the replenishment of the Special Reserve Account, in the amount of US$6.4 million, payable in two equal instalments of US$3.2 million each due on January 2008 and January 2009 respectively 2) Requests the Director-General to inform the Finance Committee and the Council in the subsequent biennium of the progress made in the replenishment of the Special Reserve Account  ... for the Special Reserve Account at the time of the formulation of the Programme of Work and Budget for 2008-09; Recalling further that the Council, at its Session of November 2006, requested the. .. with the scale of contributions adopted by the Conference at its Thirtyfourth Session Replenishment of the Special Reserve Account THE CONFERENCE, Noting that one of the purposes of the Special... coordination, costeffectiveness and reduced transaction costs at country level (Par 148) The full Programme and Work Budget document offers a detailed breakdown of the individual chapters and programmes